DSW strides toward the future with new store concepts

A couple of years ago, customer intercepts, exit interviews and store data from DSW showed that the footwear and accessories retailer was indeed delivering on its famed breadth of assortment.

But the other shoe was about to drop: Along with the positives came a more challenging revelation that was “a bit of a shock.”

“Customers were saying it feels like an open football field, layered in shoes, and they weren’t really sure where they should go on the journey,” says Simon Nankervis, DSW Inc. chief commercial officer. “We’d always seen that as one of our core strengths … . It was almost like juxtaposition: ‘We want this large breadth of assortment you offer, but we want you to give it to us in a different way.’”

So DSW, long known as an innovator in the big box space, pushed that innovation a few steps further. Its recently announced new brand mission tackles not only the presentation of assortment; it also revamps its rewards program, blurs the lines between online and in-store experiences, adds spaces for services like pedicures and shoe repair, advances philanthropic connections and introduces proprietary technology for store associates.
The company’s multidisciplinary innovation team began testing with a “lab store” in Columbus, Ohio, already one of the company’s Power 35 top-performing locations. The location came at the suggestion of DSW CEO Roger Rawlins.

“A lot of people build lab stores in the back of their offices or fulfillment centers, and they ideate and play around with it,” Nankervis says. “They have a number of executives walk through, and have their associates walk through and give feedback, and continue to ideate, and then at some point make a decision to convert a store.
“We said to Roger that we believed the right way to do this was to get real feedback from real customers, and that, given the speed at which he wanted us to move, this made the most sense … . He said, ‘Yeah, if you’re going to do this, you should really do it in a place you’ll get the most feedback from the most customers in the most real time.’”

ADDING ENVIRONMENTS, EXPERIENCES

It happened fast — as did the first failures. One goal for the new design was to rework the fulfillment center racks for the store floor. The idea was to expand the “warehouse” environment, but in a way that customers wouldn’t feel like they were in a discount chain.

“To say that our first warehouse racking solution didn’t work would be an understatement,” Nankervis says. “They were built to take cartons, not shoe boxes, and there were no dividers up the middle. Every time a customer grabbed a box, something fell over.”

After a handful of days, Rawlins asked how things were going. “We said, ‘It’s not working so well,’” Nankervis says. “And he said, ‘Don’t give up. You’ll figure it out.’ That approach gave the team the energy to really want to succeed. We have a CEO that says, ‘Don’t feel like one failure means the process is doomed. It means you’re learning.’ And that became the motto for our innovation group. If we’re not making the rest of the business uncomfortable, then we’re not trying hard enough.”

Eventually — after a dozen iterations — the innovation team landed on a shelving system that would work. Next up: The larger challenge of improving the customer experience in the store overall. Part of that came through a more vertical emphasis rather than a horizontal one, as well as areas that provided openness, space and opportunities for storytelling.

The innovation team also worked with the digital team to incorporate the terms customers used for online searches on in-store fixtures, as well as to put together assortments that mirrored how customers might flow through the offerings on a digital device. With the redesign, the assortment went from 25,000 to 70,000 pairs of shoes. Not only that, 7,000 square feet of less-than-optimized space was converted to a nail bar and Sole Lounge area for customer products and shoe repair.

“The biggest part of the work there was, how do we make these environments flow?” Nankervis says. “How do you walk from DSW into the nail bar, and not feel like we’ve just picked this thing up and dropped it in, in a way that has no logical sense or aesthetic connection?”

The end result, he says, uses color and texture in a way that’s cohesive in addition to appealing to both male and female aesthetics, while still working for families, too.

DSW’s rewards program is centered on “emotional connectivity” with the customer — it already has a loyalty database of 25 million customers at the ready.

Then there’s the revamp of the rewards program, also aimed at improving the overall customer experience. Though the system is three-tiered, everyone now earns rewards faster — and everyone receives free shipping for online orders. In addition, customers can donate used shoes to DSW to be passed along to Soles4Soles, receiving rewards points in the process. Other efforts include “amped-up” birthday treats and, for some levels, the ability to pass gifts on to friends and family.

Nankervis says the rewards program is centered on “emotional connectivity” with the customer — DSW already has a loyalty database of 25 million customers at the ready.

MAINTAINING INNOVATION

Ken Nisch, chairman of retail design and brand strategist firm JGA, has been keeping an eye on DSW’s progress — and likely will continue to do so as the retailer extends its new concepts to other locations. Though JGA has not been involved in DSW’s transformation, Nisch applauds the company for continuing to innovate and challenge itself, even while successful in a highly competitive category.

Big-box retailers have come up against an “even bigger box” with ecommerce, Nisch says, and the no-frills, streamlined approach that once was considered disruptive can now work against them. But at DSW, additional offerings such as shoe repair and nail services — experiences not easily delivered online — can give customers a reason to make the trip to the store.

“DSW is accessing different parts of pocketbooks, building relationships in areas that don’t just rely on one business or one category,” he says. “It isn’t good enough to win in just one channel. You have to win in all channels, and you only do that through innovation. We’re not in an ‘either/or’ world.”

In terms of the new store design, Nisch notes that there’s not a “wrong” or “right” way when it comes to vertical versus horizontal. Instead, he says, it’s about creating texture — and the magic is in the mix.

Time will tell whether DSW’s overall mix of innovation will hit the mark. The effort is enjoying great momentum: The new fixturing system is being installed in several other Power 35 stores; a second store in Columbus will undergo a complete remodel with the additional services; the Las Vegas flagship store soon will introduce the concept to the visiting global audience; and three other new-concept stores in Florida and Texas will open in the fall.

As for the cross-functional innovation team, its members are now constantly being asked to help in other areas of the business. The organization as a whole, Nankervis says, is coming to understand that innovation is something that both the executive committee and the CEO are committed to delivering.

In the past, Nisch says, growth and innovation were driven more by real estate and store operations. Today, however, it’s strategic and customer-driven, which means DSW is falling right in line. It’s going to be a challenging time for others who aren’t willing to think beyond their current concepts.

“This is why we love retail,” he says. “You get to get up every day, be a hero, think out of the box, fail faster and then get on to the next thing. There are not that many businesses where you have the opportunity to do that.”